Newsnight on rebalancing the UK economy
Last night’s edition of Newsnight should be required viewing for all AS and A level economists - and it is a huge shame that it is only available on i-player for another 7 days. Introduced on the shock news that even Tesco is vulnerable to the downturn, it included reports from Andrew Verity looking at whether the British economy will ever wean itself off shopping and the City, and an excellent (and all-female!) discussion including Deborah Meaden and the FT’s Gillian Tett. Try challenging your students to watch and listen to this while noting down every aspect of the syllabus which is mentioned or referred to - that will keep them busy!
There was also a debate between Employment Minister Chris Grayling and disability campaigner Sue Marsh about the government’s welfare reforms, defeated in the House of Lords the night before, and finally Tokyo correspondent Roland Buerk looking at Japanese economic stagnation of the late 1980s and 90s, to consider whether it was a “lost decade” and what could be learnt from it.
The Eurozone Crisis Explained (again!)
A superb, relatively simple, explanation of the Eurozone debt crisis with good data on historical compliance to the ‘Stability and Growth Pact’. Plenty data for students to get their teeth into. How significant is the level of government debt?
Unit 4 Macro: Richard Florida on the Great Reset
What changes are produced by great economic upheavals? The financial and economic crisis prompts a rethinking of the assumptions about how businesses succeed and how economies operate. In a recent edition of the Global Business programme on BBC radio 4, Peter Day met Richard Florida, a renowned economic geographer who has written a new book The Great Reset. Here are some of the notes I jotted down from the programme:
read more...»The Bicycle - A merit good and an integral part of sustainable transport solutions?
A recent economic study1 found that bicycle ownership can boost household income in sub-Saharan Africa by 35%. I may be biased given my passion for cycling but I think there are indeed some very strong economic arguments for encouraging more bicycles both in the developing and the developed world.
The bicycle: more than just a mode of transport
The Principles of Economics - translated…...
Many thanks to one of my students from last year (thank you, Henry!) who has just attended his first undergraduate Economics lecture and enjoyed this YouTube clip. It shows Yoram Bauman, self-appointed Stand-up Economist, making a presentation to the AAAS (American Association for the Advancement of Science) in 2007, in which he translates the Ten Principles of Economics.
Five minutes of good fun, at the expense of economists who take themselves too seriously, which you and your students might enjoy as a contrast to the gloom of impending meltdown - although I wouldn’t want to spoil the fun of their first lecture at university.
read more...»Free event at the LSE - Keynes vs Hayek
A new event for Tuesday 26th July has been added to the LSE listing today, which is a debate to be chaired by Paul Mason, economics editor of BBC 2’s Newsnight (and author of Meltdown: The End of the Age of Greed) and recorded by BBC Radio 4 for broadcast later on 3rd August. Billed as a debate between modern day followers of the sharply contrasting ideas of Keynes and Hayek, one of the speakers will be Robert Skidelsky, Emeritus Professor of Political Economy at the University of Warwick, with others to be confirmed. Entry is free, and no tickets are required as it will be first-come-first-served.
Timetric: Income per capita over the (very) long run!
A wonderful chart showing the long run path of GDP per capita for the USA, Africa, Western Europe and Asia at constant 1990 prices. The sweep of this data makes for a terrific discussion in the classroom. So too does the second chart which tracks UK population and per capita GDP (measured in US dollars at constant 1990 prices)
read more...»The Story of Economics
BBC Radio 4 has a new series on the history of economic ideas starting next week. Michael Blastland lays out the history of economic ideas to understand why economics goes wrong and whether it can ever go entirely right - here is the link to the relevant web page
Wildcard Wednesday (2) - isotype
This second Wildcard Wednesday extension activity post draws inspiration from a fascinating exhibition on isotype that I went to at the V&A in London over half term .
Civilisation: Is the West history?
I attended a talk by Niall Ferguson at the RSA last Thursday - a launch event for the new Channel 4 Series which kicks off on Sunday 6th March. The audio of his talk can be found here. In the series Niall Ferguson explores how Western civilization - a clear minority of mankind - secured a lion’s share of the world’s resources, and examines whether the West is about to be overtaken by the rest. More details here - the series will be available through Channel 4 on Demand (4OD)
Introducing Tuesday Talks!
Last week, my extension class and I watched a thought-provoking short TED talk by Rachel Botsman on the increasingly prevalent phenomenon of collaborative consumption - the talk is shown further below. According to Botsman, collaborative consumption is the use of bartering, swapping or sharing of consumer goods (usually durables) using technology to help the manage these collaborative relationships between strangers. The idea provides a great contrast to the ‘standard’ approach to thinking about consumer expenditure in an economy.
read more...»What are the top 10 economics news stories of 2010?
My colleague has found The Daily Telegraph’s illustrated Top 10 Economics news stories of 2010, which could be a useful resource to reawaken students’ economics memory at the start of term. Perhaps it could be used to spark discussion about macroeconomic consequences, or by showing students the pictures and asking them to suggest what the news story was - or by asking them to suggest what they think the top 10 stories were, and then comparing to the selection given here. Certainly it would be useful for reminding them to use knowledge of the UK economy in any papers they are sitting this month.
Is Microfinance is an Effective Tool to Help Eradicate Poverty?
A seasonal hat tip to Anita Hibbert for spotting what looks to be an excellent resource for students and teachers who look at and evaluate microfinance as a strategy for reducing poverty…
read more...»The Joy of Stats - Brilliant Hans Rosling Presentation
A seasonal hat tip to Henry Wingfield for spotting this superb four minute presentation from Hans Rosling (Professor of International Health at Karolinska Institute and Director of the Gapminder Foundation) on two hundred years of progress in lifting life expectancy across the world and some of the huge differences between and within nations. A superb presentation - hugely visual and memorable. More details here on The Joy of Stats - the new BBC series due to air next week.
Let’s hear it for the girls!
My better half and I recently popped along to the cinema to see ‘Made in Dagenham’.
The film is set in the late 1960s and depicts the true story of the 200 female machinists and their fight for fair pay at the Ford plant in Dagenham, Essex in the late 1960s. The film is an archetypal feel-good piece of social history, and packed with interesting Economics. Teaching to the syllabus alas does not always afford us the luxury of discussing relatively recent Economic history – this is a real shame. An appreciation of these events I feel can really help to bring several topics alive. Encourage your students to go and see the film – it’s all there:
1/ Monopsony – In the late 1960s Ford employed 55,000 people in Dagenham – 54,800 of them were men
2/ Trade Unions and the Supply Side – wage negotiation and industrial action
3/ Legislation – The dispute was a catalyst for what became the 1970 Equal Pay Act: something that still provokes controversy; today – 40 years later – pay disparity still remains an issue (always extra fun to discuss this in an all boys’ school!)
Cinemas are also of course excellent places in and of themselves as regards turning the restless mind to Economics issues. This particular establishment provides sofas for customers to lounge upon, and one is able to order items from the menu via a handy waiter/waitress service. This of course has several ramifications re the business model the firm operates. I marvelled at the application of cross price elasticity as I took in the outrageous prices on the menu! My thoughts turned to price discrimination as I pondered the ticket price! I glanced round approvingly at the civilised audience, gathered together in part via the power of the price mechanism!
I can’t finish without mentioning the fact that the soundtrack during an advert for a well known brand of Corn Flakes was provided by one of my favourite bands … Primal Scream, a Scottish alternative rock group. I almost choked on my Sauvignon Blanc as I vacillated between thoughts of ‘sell out!’ and the use of multiple revenue streams to maximise the value of a well-known product. I have to tell you – the irrationality of the fan won the day …. Oh Bobby, how could you?
Financial Reform Bill - what goes around, comes around
A look at the bills set out in the Queen’s Speech yesterday shows a handful which will be of interest to students of economics, including the Office of Budget Responsibility bill, the Postal Services bill, the Welfare Reform Bill, the Energy and Green Economy bill and the Pensions and Savings Bill - a look through the list gives an opportunity to analyse the micro and macroeconomic impact that each might have.
read more...»Stephen King on connections between monetary and fiscal policy
Monetary and fiscal policy may be two separate topics in the published AS and A2 economic syllabus but any smart student knows that there are many connections between the two.
read more...»Lessons for economists from the crisis
Larry Elliot has a superb piece in today’s Guardian on the challenges facing the economics profession in the fallout from the global economic crisis. He flags up a new book by David Smith “The Age of Instability: The Global Financial Crisis and What Comes Next ” which is now available through Amazon and will be a great read for ambitious AS and A2 students. And he flags up the first major meeting of the George Soros funded Institute for New Economic Thinking which is meeting appropriately enough in Cambridge. Reading through the agenda for the conference it looks like a gold mine of top quality speakers and sessions - sadly by private invitation only!
The director of the Soros-funded Institute is quoted as saying
“Too much of modern economic theory relied on sophisticated mathematical models to predict market behaviour. A broader, interdisciplinary approach to economics, taking in history, psychology, natural science — to deal with issues such as climate change — and even literature was now needed”
Larry Elliot argues in his piece that
“There is no need to reinvent the wheel. It’s more important to strip away the layers of complexity that gave big-picture economics a spurious and dangerous exactitude in advance of the crisis. The big lesson in economics from Keynes is that we know less than we think we do, and that there is a vast difference between the output of economic models and the actual behaviour of individuals.”
Read: Rescuing economics from its own crisis
The Times reports that George Soros is to create a new economics institute at Oxford University.
Long Swings in Global Growth Drivers
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This is an absolutely fascinating piece from Janus Lim drawing on Angus Maddison’s incredible work on economic growth going back centuries. Superb for the historical perspective and the big swings in growth phases dominated by just a handful of countries.
Now and the 1930s - Great Blog
A hat tip to Diane Coyle for flagging up this superb blog update from Barry Eichengreen and Kevin O’Rourke comparing today’s global crisis to the Great Depression - fantastic for students of economic history.
50-year decline in housing affordability
The BBC website has a summary of the key points in a report issued by the Halifax about the housing market over the last 50 years. The main headline is that houses have become less affordable, with the average annual price rise of 2.7% outstripping the 2% annual rise in incomes over the period. There have been 4 periods of boom in house prices: 1971-73, 1977-80, 1985-89, and 1998-2007, with the greatest acceleration in the last decade. In 1959 the average house cost £2,507 (compared with an average price in December 2009 of £162,103 according to Nationwide Building Society) and about 14% of them did not have an indoor toilet (compared with 0.2% in 1996). In 1967 22% of houses did not have a basic hot water supply, and built-in central heating was a rare facility.
read more...»How Markets Fail - the logic of economic calamities
A huge number of well-known economists and a remarkable number of ideas make an appearance in John Cassidy’s new book How Markets Fail – the logic of economic calamities. From Akerlof and Arrow to Von Neumann and Walras, John Cassidy’s ambitious and lucid work takes us on a swift journey through over two hundred years of economic thought and policy-making through to the moment when the global financial system stared over the abyss in the early autumn of 2008.
read more...»Paul Mason on the Wall Street Crash
Paul Mason - BBC Newsnight’s Economics Editor - is running a series of reports this week to mark the 80th anniversary of the Wall Street Crash. They are likely to be superb and a great resource for students and teachers. Here are the links to Paul’s output.
What caused the Wall Street Crash? (11 mins)
How the crash changed everything (13 mins)
The UK Economy - a Long Run Perspective
We tend to focus on short run changes in output, jobs, prices and profits and risk missing the long term picture of where an economy is. A year ago I produced this chartroom presentation as the UK economy entered recession - this has now been updated and might be useful for colleagues helping students develop an appreciation of the long-run trends in key UK economic data. It is available for download in pdf and scorn-compliant VLE format.
Launch streamed revision presentation on the Long Run Perspective
Download SCORM-compliant VLE ZIP version
Download printable pdf handout version
Marx and the labour theory of value
The latest extract from Edmund Conway’s new book “50 Economic Ideas” looks at the work of Karl Marx and in particular the validity of his labour theory of value
“At the heart of Marx’s theories was the labour theory of value. This idea, laid out in Das Kapital (1867), states that a commodity is worth the amount of time it takes for someone to make it. So, for instance, a jacket that takes twice as long as a pair of trousers to stitch and sew ought to be worth twice as much. However, he argued, those who ran companies pocketed disproportionate amounts of the profits themselves. The reason bosses get away with this, Marx argued, is that they own the means of production and so are able to exploit their workers.There are question marks over how well the labour theory of value holds up. However, the broad thrust remains undiminished: that there is a major divide between the wealth and opportunity of those who own land and capital and of those who do not.”
The rest of the article can be found here
Making the case for more government debt
Samuel Brittan has a beautifully written piece in today’s Financial Times trying to debunk the concerns about the ballooning level of government debt and arguing the case for government borrowing when private sector loans remain weak because of the credit crunch
read more...»Defining our Times
For example, the National Bureau of Economic Research in America defines it as “a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales”. On this basis the US economy has been in recession since the end of 2007.
While for the economist Christopher Dow, recession worthy of the name was one featuring a “clear absolute fall in GDP between one calendar year and the next”, usually but not always followed by a second fall.
David Smith goes on to examine difference interpretations of what constitutes a ‘depression’ and how we will know whether we are in one or not, drawing some comparisons with recessions and depressions from the past – which might make useful reading for those students starting to think about their entry for the RES Young Economist of the Year competition.
Charts used in this blog
US_Charts_0209.ppt
Alternative views of the economic crisis to evaluate
While politicians, business leaders and policymakers searched for solutions at this year’s World Economic Forum in Davos, different debates were taking place at the “alternative” World Social Forum in Belem, Brazil.
There, a mix of some 100,000 campaigners, thinkers, and working people came to starkly different conclusions about the causes of the downturn, and how best to address it. This BBC article takes the views of 4 of the participants:
David Evan Harris, Director, Global Lives Project
“The current economic model which privileges unbridled competition is not sustainable”
Walden Bello, Focus on Global South
“This crisis has roots in global overproduction”
Myriam Vander Stichele, Researcher on multinationals
“Calls for re-regulation require a dismantling of the architecture of international trade treaties”
Marcos Arruda, Economist
“At this point the capitalist emperor has no clothes”
Their views make interesting reading; while they all broadly agree that the existing model of the global economy has to change in the light of the economic crisis, they offer very different perspectives of the root causes and the solutions – worth reading and evaluating to assess which you think would work best, and why.
Tracking GDP for the Roman Empire
The Today Programme on Radio 4 had a spell-binding interview with an economic historian who has devoted virtually the whole of his working life to creating national income statistics for the world economy - data that we can use today to enrich and deepen our understanding of why some countries grow faster than others. Click here for a discussion between Evan Davis and the historian Angus Maddison, Emeritus Professor at the Faculty of Economics at the University of Groningen. He explains how you can work out the GDP of the Roman Empire! And here is a link to his most important work.
